Builders FirstSource 4Q Profit Soars 223%; Shares Gain 6.5%

Builders FirstSource reported stellar 4Q earnings that exceeded the Street’s estimates. Following the strong bottom-line performance, shares of the manufacturer and supplier of building materials closed 6.5% higher on Friday.

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Builders FirstSource (BLDR) reported adjusted earnings of $1.26 per share that surpassed analysts’ expectations of $0.90 and jumped 223.1% year-over-year. Revenues of $2.53 billion beat the Street’s estimates of $2.48 billion and increased 43.5% from the year ago period.

The year-over-year improvement in its revenues reflects higher commodity prices and benefits from acquisitions. While commodity price inflation added 26.5% to revenues, acquisitions completed during the last year contributed 2% to net sales growth. (See Builders FirstSource stock analysis on TipRanks)

Builders FirstSource said that its 4Q results do not include the financial results of BMC Stock Holdings as the acquisition had only been completed on Jan. 1 this year. Notably, the two companies entered into an all-stock merger agreement in August 2020. The combination has made Builders FirstSource the nation’s premier supplier of building materials and services.

On Jan. 13, BMO Capital analyst Ketan Mamtora initiated coverage on Builders FirstSource with a Buy rating and price target of $50 (16% upside potential). Mamtora believes that the merged company is well positioned to benefit from an upswing in the housing market. The analyst noted that nearly 80% of the combined companies’ revenues are tied with new residential constructions.

Overall, the Street has a bullish outlook on the stock, with a Strong Buy consensus rating based on 9 unanimous Buys. The average analyst price target of $50.67 implies upside potential of about 17% to current levels. Shares have gained about 86% over the past year.